Call me 'Thick' but CC help required

a_regular_viewer

sorry to burdon you guys with this but not being a CC holder and never have been i just need a little bit of advice.

Question: i'm thinking about a small purchase of £2500 and i can repay this fully come late March/early April but the purchase will be made sometime this month (January).
Rather than applying for a loan i was thinking about a CC that has 0% for 12 months on purchases.
Do you guys think this is a good idea or should i apply for a loan? Also, and here's the help i require basically cos i don't understand - if i purchase on a CC that is 0% for 12 months does anyone know what would be the minimum monthly amount that i would have to pay the CC company for the 2-3 months before i pay the full amount back? (based on the purchase price being £2500) Obviously i would like it to be as small as possible but i'm sure the CC company would want something so what would that something be?

I hope i haven't given you guys too much of a headache and thanks in anticipation of an answer...

jd87

The minimum repayment varies from one card to another. Some say 1%, some say 3%, some say things like "£25 plus interest and charges, or 1% of the balance, whichever is more". You need to read the summary box or T&Cs to find out, or call and ask them.

In theory it sounds like a good idea, but bear in mind that if this "small purchase" is something like a car or holiday, the retailer my add an extra charge for paying by credit card.

Martinslovechild

jd87's correct - all cards are different so you'll need to check the small print.

Always set up a direct debit to collect the minimum payment. As well as giving you piece of mind that the payment will always be made, they collect it on the actual date due (rather than you having to pay it up to a week beforehand due to allowing up to 5 working days to 'clear').

It's worth checking out cards such as Tesco's Clubcard Credit Card which offers 13-months 0% on purchases. Have a look at some of the comparison sites for the latest list. The list on MoneySavingExpert is usually up-to-date too.

ironlady2022

Also if you are paying it off in March/April, then you don't need a 12 month 0% purchases credit card, you can opt for a shorter one. The longer ones are harder to obtain.

chattychappy

Martinslovechild wrote: »

Always set up a direct debit to collect the minimum payment.

I really don't like categorical statements like this - plenty of threads here from people that get confused by them.

My advice is: make sure you make the minimum payment. You can choose DD if you prefer. If you go this route, then be sure to have the funds in your current account (to avoid double charges) and be sure that the thing is set up in time to make the first payment.Or pay manually at first.

I pay all my credit cards manually (and have done for 25 years) - either internet banking or on the credit card's own website using a debit card. Nobody gets to take money from my current account without my initiating the specific transaction and doing so at a time I choose.

chattychappy

a_regular_viewer wrote: »

if i purchase on a CC that is 0% for 12 months does anyone know what would be the minimum monthly amount that i would have to pay the CC company for the 2-3 months before i pay the full amount back?

It varies, as noted. But I think it's fair to say that most cards have minimums of no more than 5% of the outstanding balance (unless the interest is more than this - hopefully not!)

You might have trouble getting a Tesco-type card if you've not had CCs before.

But I would still go the CC route rather than a loan, particularly if you are a little uncertain as to how and when you can make payments but know the whole lot's likely to be paid off within a few months.

PS what would a "large" purchase be?

CashRequired

chattychappy wrote: »

I really don't like categorical statements like this - plenty of threads here from people that get confused by them.

My advice is: make sure you make the minimum payment. You can choose DD if you prefer. If you go this route, then be sure to have the funds in your current account (to avoid double charges) and be sure that the thing is set up in time to make the first payment.Or pay manually at first.

I pay all my credit cards manually (and have done for 25 years) - either internet banking or on the credit card's own website using a debit card. Nobody gets to take money from my current account without my initiating the specific transaction and doing so at a time I choose.

Where as i think the DD is a good idea. You will lose your 0% offer if you fail to make a payment on the due date. Plus you have to make payment a few days before the due date so it has time to process. Sometimes people forget due to being busy, theres no harm in having a DD imo.:)

a_regular_viewer

Many thanks for all your input - very helpful....
Lots to 'chew' over...

Martinslovechild

chattychappy wrote: »

I really don't like categorical statements like this - plenty of threads here from people that get confused by them.

My advice is: make sure you make the minimum payment. You can choose DD if you prefer. If you go this route, then be sure to have the funds in your current account (to avoid double charges) and be sure that the thing is set up in time to make the first payment.Or pay manually at first.

I pay all my credit cards manually (and have done for 25 years) - either internet banking or on the credit card's own website using a debit card. Nobody gets to take money from my current account without my initiating the specific transaction and doing so at a time I choose.

Chatty,

I can't tell you how many times on these boards people have either assumed that payments using the Faster Payments method which leave their bank will arrive at the credit card company the same day (they do - but only if the CC company is able to receive faster payments - otherwise it's the standard 3/4 working days).

In addition, people have made the mistake of days rather than working days, forgetting about Bank Holidays and Easter, Christmas etc - with the effect that their payment arrives a day or two late.

MBNA cardholders will be well-versed in the above. A number of people who visit this board will no doubt be aware that one day late means the immediate loss of their 0% offer (their debt is suddenly hiked up to 19.9% APR or more) - no excuses. In addition, a late payment is a red mark on your credit report - you have been warned!

What I would say to people is this - if you're the kind of person well in control of your finances, then simply remember to make your monthly minimum payments on-time every time, whether or not you choose manual payments (allowing up to 5 working days) or direct debit payments. If on the other hand, if you're like the majority who has a busy working & social life, possibly has distractions such as kids or hobbies, then set up a direct debit. The payments are collected on the day they're due by the bank - you'll never be charged late fees (unless there's insufficient funds in your account!) and the payment leaves your account up to a week after it would have done going down the manual route. You're even covered by the Direct Debit Guarantee if there are any problems whatsoever.

I resent the suggestion that I was making "categorical statements". The original poster asked for advice. I offered some. If the original poster decides not to set up a direct debit, that's absolutely fine, it's up to him - but his life will be greatly improved if he does because when he goes on holiday, he has one less thing to worry about; after cancelling the milk and papers, he doesn't have to switch on his PC to double-check that he's scheduled a minimum payment to be sent to his CC in 10 days time.